Well, they’re at it again!  A year ago, Congress was at this same conundrum–whether to raise the interest rates on the Government-Guaranteed Stafford Loans.  And, since no one wanted to be painted with the anti-student brush, both sides agreed to retain the then existing 3.4% rate for one more year.  Well, time’s up!  Tomorrow (July 1), the rate will double, to 6.8%. The linked article from The (Tacoma) News Tribune,, provides some background.

Many members of Congress, especially the younger ones, needed PELL Grants and Stafford Loans to attend college.  The Grants don’t have to be repaid; but, the Loans do.  Also, there are Dollar limitations–based on a Student’s Need and the College–however, the amounts are often not enough to cover the total cost of college–especially for Private Schools or Out-of-State Tuition.  But, even In-State Fees can be a stretch.

Besides what a student and his/her Family can provide, PELLs and Staffords, colleges can often provide some sort of Scholarships, Grants or Work/Study Programs.  Now, I’m going to keep this simple–so that I might understand it.  But, there is one other source of funds–Private Loans.  Now, I say this, not to confuse the issue; but to lay the groundwork for part of the potential solution.  Back to Private Loans later…

Some Government Programs should be designed to pay as you go, such as the Ticket Tax that passengers pay (for airline travel), which covers some airport expenses, such as the control tower and safety inspections.  While other Programs, such as subsidizing Mass Transit should, at least, be partially funded by the Federal Government in order to: grow the ridership; reduce CO2 exhaust; and reduce the need to repair existing highways and construct new ones.  I believe that helping finance education fits into that second category. Fund something so that it will benefit from future growth.

Assisting today’s High School graduates and their Families, in financing a college education will result in:  people working better jobs, patronizing the local economies and paying Taxes; reducing the demands on the Social Safety Net;  potentially reducing our prison population;  and, of course, paying for their own Health Care.  Remember that college graduates make considerably more, spend accordingly and enhance the GDP.

One Program that many in Congress don’t like to talk about is the Private Loans;  because, the Financial Lobby profits greatly from it. Students apply through financial institutions, which administer the loans; however, these loans are totally funded and guaranteed by the U.S. Treasury.  And, guess what: they charge much higher rates of interest than the Stafford Loans.  To me, that’s a “No-Brainer” Business for the Banks to be in, No Risk, just collect the Profits.  But, it’s not for the US Taxpayer!

So, if those Deficit Hawks truly want to do what’s right for the Younger Generation–and the Country–they should eiminat the Private Loan Program.   Subsidize the Kids, not the Bank’s!    And, according to the linked article, the CBO reported that the Student Loan Programs provided a Net Gain of almost $110 Billion to the Government.  So, the Congressional Budget Office seems to agree with me.



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